At first glance, the investor services industry was much the same in 1996 as it is today. A decade ago, Scottish Widows outsourced its fund administration to WM Company, now owned by State Street to which Scottish Widows Investment Partnership has outsourced operations.

Threadneedle Asset Management undertook a custody review and appointed Chase and Midland; Threadneedle is reviewing its custody and administration arrangements.

However, a closer look shows how the industry has changed. Custodians have expanded their product range and geographic coverage, moving well beyond the traditional securities movement and safekeeping role. Today, the largest transition manager is State Street and the top performance measurement businesses are owned by custodians. Few could have predicted 10 years ago that the global custodian banks would be transformed into a new type of service provider covering the investment lifecycle.

The trends that shaped the decade remain influential and will have a significant bearing on how the industry looks in 2016.

Pricing transparency: Tariffs and charges have become clearer. With specialist consultants looking at every aspect of the business – from securities lending performance to income collection times – there is practically no leeway for the custodians to beef up margins through obscure pricing practices.

Alternative investments: Hedge funds, private equity, derivatives and real estate have become mainstream investment classes, and custodians have been challenged to build or buy specialist service providers as a result. Since 2002, seven of the 10 largest global custodians have bought independent firms with specific industry expertise. The rise of liability-driven investment strategies will require more investment in human and technological resources.

Closure of defined-benefit schemes: The early growth of the global custody business was built around pension funds but as defined benefit plans have been closing, these large pools of assets have become stagnant. Custodians now spend much less time pursuing these plans as potential clients, preferring to focus on asset managers for growth.

Outsourcing: Although there had been isolated examples of investment operations outsourcing, it was not until the late 1990s that the concept took hold among investment managers. The market suffered setbacks in 2005 after deals involving Schroders, Merrill Lynch Investment Managers and F&C collapsed. In the long term, more managers are expected to outsource. State Street leads the market, with $2.8 trillion of outsourced assets under administration.

Regulation: After the US mutual fund scandals, many firms sought help from their custodians to guide them through regulatory and compliance issues. As a result, mutual fund companies are beginning to outsource much of their middle- and back-office processing.

Securities lending: Custodians enjoyed a purple patch in the securities lending business as pension funds sought to boost returns. But the market has changed dramatically, with large and powerful third-party lenders, such as Dresdner Kleinwort Wasserstein, winning mandates. This problem was heightened by the arrival of electronic securities lending platforms, through which lenders and borrowers trade directly.

The power of consultants: More searches are handled by specialist advisers, rather than done in-house. The trend began in the US and has spread, with firms such as Thomas Murray and CSTIM wielding considerable power. This has resulted in better disclosure of information and more competitive bidding.